In the run-up to the closure of a coal-fired power plant in Tonawanda, New York, community leaders prepared for the loss of jobs and tax revenue. In this blog post, former Resources for the Future scholar Daniel Propp and Senior Research Associate Wesley Look examine how the insights and lessons from Tonawanda can inform other communities that are undergoing a similar energy transition.
An energy transition is underway in the United States. The share of electricity powered by renewable energy sources has climbed, and the share powered by fossil fuels, especially coal, has fallen.
For regions and communities whose economies historically have relied on fossil fuels, however, the transition to clean energy can portend the loss of local jobs and tax revenue for community services, among other challenges. Ensuring that these communities have opportunities that make up for these losses and generate new economic growth is central in the idea of a just transition to a clean energy economy. Such opportunities can help provide members of these communities, which historically have been the backbone of the energy system, with a fair chance at prosperity in a decarbonizing world.
Examples of communities that have transitioned away from fossil fuels can offer lessons for other communities that are working through similar challenges—and for policymakers who want to provide adequate support before problems, economic or otherwise, become acute. In our recent report, we examine one such community in Upstate New York, where a coal-fired power plant shut down in 2016.
Tonawanda and the Huntley Generating Station
Tonawanda, a town on the Niagara River in Erie County, New York, experienced economic prosperity in the nineteenth and mid-twentieth centuries thanks to its role as a regional manufacturing hub, but the town’s population began declining in the 1970s as the local manufacturing sector shrank.
Tonawanda is home to the Huntley Generating Station, a coal-fired power plant that, due to a combination of environmental regulations and declining profit margins, produced less and less electricity as the twenty-first century progressed. By the time the Huntley Generating Station permanently closed in 2016, the plant’s boilers were operating at a fraction of their capacity. The closure of the Huntley Generating Station, which once was the largest taxpayer in Tonawanda, posed a risk to the local school district and municipal services. Residents of Tonawanda who were concerned about the fiscal ripple effects of the plant’s closure began meeting in 2013 to discuss how the town could protect itself in the short term and build a more resilient economy in the long term. The community members formed a coalition, the Huntley Alliance, which comprised union leaders, public officials, environmental advocates, and local teachers.
After navigating the difficult process of building consensus among these disparate groups, the Huntley Alliance approached New York State lawmakers in 2015 with a request for fiscal support to help fill the gap in local tax revenue that the closure of the power plant would create. Later that year, the New York State Legislature passed a bill allocating funding to any municipality or school district in New York State that has lost a certain amount of tax revenue from a fossil fuel power plant closing.
Tonawanda qualified for this funding, which prevented fiscal challenges, as community members feared, when the Huntley Generating Station closed in 2016. Separately, the local electrical workers’ union ensured that all 79 Huntley employees either found a new job or retired when the plant closed. Tonawanda Town Supervisor Joseph Emminger called the efforts of the Huntley Alliance a success in protecting the town for the near future.
Learning from Tonawanda
While many insights can be drawn from Tonawanda’s experience, the lessons are not applicable to every community that faces a difficult transition away from fossil fuels. New York State was generous with funding to support the transition; not all state governments provide funding that is dedicated to the energy transition. In some states, such as Alaska, North Dakota, and Wyoming, the state itself depends heavily on fossil fuel revenues and may not have the fiscal capacity to support the many local governments that similarly rely heavily on fossil fuels to fund public services. Tonawanda also benefited from a relatively diverse economy; other communities that rely more heavily on the fossil fuel industry, such as those in Appalachia, may have fewer options for navigating an energy transition. Readers who are interested in additional examples of communities in transition may want to look at case studies that Resources for the Future (RFF) published for Athens, Ohio and Colstrip, Montana.
Nevertheless, Tonawanda is an example of a community in which a proactive response to the energy transition prevented immediate negative consequences and secured the time to develop long-term solutions. We see several lessons from the experience in Tonawanda that may be useful for communities that face similar circumstances and outline these lessons below.
Start Planning Early
A proactive approach to the energy transition is essential for securing funding, coordinating stakeholders, and planning for diversification of the local economy and tax base. Communities and organizations that are facing a transition should begin planning as soon as possible, and energy companies should endeavor to provide early warning regarding potential closures of large facilities such as power plants.
Formalize the Transition
Without dedicated personnel and funding, transition planning can lack focus and lose momentum. To the extent possible, communities should seek to formalize the transition process by, for example, establishing a committee or task force to facilitate transition.
Engage a Diversity of Stakeholders
Engaging diverse stakeholders early is important for ensuring representation of the variety of community interests that ultimately will contribute to decisions related to the transition and economic development. The Huntley Alliance included and engaged unions, environmental groups, and teachers associations.
Identify a Common Objective
Some of the community leaders we interviewed believe that unity was the reason that the Huntley Alliance was successful in persuading elected officials to provide state support. By defining a narrow objective on which they could agree, coalition members were able to overcome ideological differences. Defining a clear, common objective at the outset can make the process of navigating a transition proceed more smoothly.
Expect and Plan for Indirect Consequences
Proactive engagement with a diverse array of stakeholders also can help planners anticipate the potential indirect consequences of a facility’s closure. For example, the Huntley closure jeopardized the availability of water for industrial uses in Erie County, which had depended on pumping facilities at the Huntley plant. Energy transition programs should have sufficient flexibility to address unique needs across communities as they arise.
Seek Transition Funding from State and Federal Agencies
The retirement of a coal facility can eliminate local government tax revenue, making it difficult to fund transition efforts. Dedicated state and federal transition funding can help local governments mitigate the immediate fiscal effects of a facility closure and buy time to plan for an economic transition.
Progress on adapting Tonawanda’s economy for the long term has been mixed. Although a community partnership called Tonawanda Tomorrow has formed to coordinate the adaptation process, the COVID-19 pandemic and the suspension of the sale of the Huntley Generating Station property have disrupted the partnership’s plans. One final lesson from the Huntley experience, therefore, may be that these transitions tend to require time and persistence—and with such persistence, positive change may be possible.